BlackBerry, on the block as its smart phone business struggles, is in talks with Cisco Systems, Google and SAP about selling them all or parts of itself, several sources from Telecom sector close to the matter said.
Such a deal would be an alternative to the preliminary agreement reached weeks ago with a group, led by BlackBerry’s biggest shareholder, Fairfax Financial Holdings, to take the company private for about $4.7 billion, a bid which has faced some skepticism because of financing questions.
The company, based in Waterloo, Ontario, has asked for preliminary expressions of interest from potential strategic buyers, which also include Intel Corp and Asian companies LG and Samsung, by early next week.
It is unclear which parties will bid, if any. But the potential technology buyers have been especially interested in BlackBerry’s secure server network and patent portfolio, although doubts about the assets’ value remain an issue, the sources said.
Google, Intel, Cisco, LG and SAP declined to comment. Samsung was not immediately available for comment.
Possible bidders are proceeding with caution given the uncertainty around BlackBerry, which last month reported a quarterly loss of nearly $1 billion after taking a writedown on unsold Z10 phones.
The value of BlackBerry’s patent portfolio and licensing agreements is likely to halve in the next 18 months, a company filing from this week shows, potentially limiting its attractiveness.
According to analysts, BlackBerry’s assets include a shrinking yet well-regarded services business that powers its security-focused messaging system, worth $3 billion to $4.5 billion; a collection of patents that could be worth $2 billion to $3 billion; and $3.1 billion in cash and investments.
Adding to the company’s woes, it’s likely to burn through almost $2 billion of its cash pile in the next year and a half, Bernstein analyst Pierre Ferragu wrote on Thursday after studying the filing.
Private equity firms that have showed interest in BlackBerry – which also include Cerberus Capital Management – have asked the company and its advisers to provide additional financial details about its various business segments, two of the sources said. That process could take another few weeks, as BlackBerry focuses on taking bids from industry peers, the sources said.